Lara
Croft: Tomb Raider is a minor masterpiece of the
arcane art of studio financing, or as Sumner Redstone
calls it, "risk management." The trick, though
applied in subtle brushstroke, is to use OPM-- -- Other
People's Money.

Here is the triple-play through which Paramount made
a $94 million movie for only $8.7 million.

First, Paramount
got $65 million from Intermedia Films in Germany in
exchange for distribution rights for 6 countries: Britain,
France, Germany, Italy, Spain and Japan. These "pre-sales"
left Paramount with the movie, and all the rights, the
rest of the world.

Second, Paramount
arranged to have part of the film shot in the Britain
so that it qualified for a Section 48 tax relief. This
allowed it to make a sale-leaseback transaction with
the British Lombard bank Paramount on paper sold the
movie to British investors, who captured the British
government subsidy, and then via a lease and option,
returned it to Paramount. Through this financial alchemy,Paramount
netted, up front, a cool $12 million.

Third, Paramount
sold the copyright through Herbert Kloiber's Tele-München
Gruppe to a German tax shelter.
Because German law did not require the movie to be shot
in Germany, and the copyright transfer was only a temporary
artifice, the money paid to Paramount in this complex
transaction was truly, as an executive put it, money-for-nothing."
Through this maneuver, Paramount made another $10 million.

Before the movie was ever green-lit or cameras ever
began turning, Paramount had gotten back, risk-free,
$87 million. to be sure, for arranging this financial
legerdemain, Paramount paid about $1.7 million in commissions
and fees to middlemen, but that left it with over $85.3
million in the bank. So, its total out-of-pocket cost
for the $94 million was only $8.7 million. And Paramount
could cover even that paltry risk by selling the Pay-TV
rights to its corporate sibling, Showtime, for $10 million.
The lesson of Lara Croft: Tomb Raider is that
things in Hollywood-- and especially numbers-- are not
what they appear to be to the outside world. According
to the public numbers, it cost $94-million to make a
movie that earned only $62.8-million in rentals in North
America. That equation changes radically when the $85
million that Paramount netted from its non-public"risk
management" is added in, proving, yet again, in
Hollywood, the real art of movies is the art of the
deal.